Does taking Social Security at Age 62 and investing it pay off?? Let’s start with the data table below. This data assumes that your Social Security Payment at Age 62 is $1180 per month and $1789 a month at Full Retirement Age (Age 67). The difference, In order for this to work, You would be able to invest proceeds from the early years and have them cover the $609 difference in the later years.
Assuming a continued 5% return, then the $609 needed to normalize your FRA payment depletes at age 82 years and 10 months.
This assumes there are no taxes on the $1180, you achieve a 5% return, and you do not have to return any of the $1180 due to income limits.
Below is the draw down schedule. Note the amount on the left assumes a 5% per year return (converted to monthly return) in its balance. For those interested in checking the math the formula on the left cell is: (previous month’s ending balance x (1+0.00408)) – $609 = remaining balance for the current month after ‘top up’ payment. Note the yellow starting and ending balances on the top and bottom left (respectively) for those that just want the answer without the math.
